Business | Through the sound barrier

Streaming has pushed Latin music into the mainstream

For radio-loving Latin Americans, streaming is a natural fit

“MI GENTE” lures listeners with a mesmerising hook, a thumping beat and lyrics about breaking down barriers. A collaboration between J Balvin, a Colombian reggaeton star (pictured), and Willy William, a French producer, the latest product of this summer’s Latin craze is crooned almost entirely in Spanish. (The title means “My People”; reggaeton borrows from hip hop, reggae and rap.) The song topped the charts on Spotify, a streaming service, for weeks. “To be a crossover artist, you used to have to sing in English,” said John Reilly, Mr Balvin’s publicist. Now six of YouTube’s top ten music videos are predominantly in Spanish. In August the Billboard Hot 100, which tracks streams, sales and radio plays, sported seven Latin hits. Just five graced the chart in all of 2016.

Latin music is helping the music industry to arrest years of decline. Its growth is far outpacing that of other genres. Last year Latin America yielded just $598m out of total global recorded-music revenue of $16bn, but sales increased by 12%, against 5.9% worldwide. Streaming revenue in the region (including subscription services such as Spotify and Apple Music, as well as YouTube and other websites) leapt by 57%.

“The Latin audience is a lean-back audience,” explains Rocio Guerrero, Spotify’s head of global cultures. For radio-loving Latin Americans, who were less likely to own CD players and iPods than music fans elsewhere, streaming was a natural fit. Now Latin fans are listening to hour upon hour of music. Mexico and Brazil are among Spotify’s top four markets by volume of streams. Jesús López, chief executive of Universal Music Latin America, has said the streaming platform has “democratised music consumption”. Fans have access to any music, anywhere.

Spotify’s curators are also makers of fortune, promoting Latin hits and rising stars by featuring them in playlists like “Baila Reggaeton” (Dance Reggaeton), the app’s third most popular. A spot in “Baila Reggaeton” guarantees tens of millions of streams from the list’s nearly 6m followers, which can propel a song into Spotify’s global charts. Danny Ocean, a Venezuelan unknown with a honey-smooth voice, released “Me Rehúso” by himself on YouTube—and saw it soar when Spotify added it to “Baila Reggaeton”.

As streaming services have tracked and monetised, labels have noted Latin music’s climb up the charts. The Spanish version of “Despacito”, by Luis Fonsi and Daddy Yankee, a Puerto Rican duo, was already ubiquitous in Latin America when Justin Bieber heard it in a club in Bogotá. Mr Bieber asked if he could “jump on the track”. The hybrid version released in April became the most-streamed song yet, with nearly 5bn audio and video plays.

Record labels are eager to tap a fan base that includes Latin Americans, Latinos in America (one of the country’s fastest-growing ethnic groups) and millions of teenagers worldwide drawn to reggaeton by “Despacito” and “Mi Gente”. Latin music captures 8% of streams in America, which translates into advertising revenues and performance sales for music labels. It still accounts for just 2% of songs and albums sold. “Would labels rather have a million streams or a million albums sold? It’s a no-brainer,” says David Bakula of Nielsen Entertainment, a research firm.

Universal Music Group, the world’s biggest music company, which co-manages Mr Balvin and Mr Fonsi, first invested in digital teams in Latin America a decade ago. That seems to be paying off. Scorpio Music, the French indie label behind “Mi Gente”, last celebrated a Billboard hit in 1984. It hopes Latin music will be a ticket back to renown. “We have to prove we’re relevant and that ‘Mi Gente’ wasn’t a lucky strike,” said Chiara Belolo, its head of international development. Mr Balvin has the same task. He is working on a remix of his hit track with a “huge” mainstream artist. He owes much of his success to streaming, he says, “but I’m the type of artist who doesn’t like to talk about money.” Even so, he is now the kind who makes it.

This article appeared in the Business section of the print edition under the headline "Through the sound barrier"

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